A commercial bridge loan is a short-term financing option used by businesses to cover immediate financial needs until more permanent financing can be secured or other long-term financing becomes available.
The term “bridge” refers to the fact that this type of loan “bridges the gap” between the current financial situation and a more stable, long-term solution. Commercial bridge loans are typically used for real estate transactions, such as buying, refinancing or renovating commercial properties.
These loans often have higher interest rates and fees compared to traditional loans, but they provide businesses with quick access to capital when it is needed most. The repayment terms for commercial bridge loans can vary, but they typically last between six months to two years. The loan may be secured by the underlying asset or collateral, such as the property being purchased or renovated, which provides the lender with a level of security if the borrower defaults on the loan.